Catalan trade passing the Brexit test

Overcoming obstacles

Where Catalonia is concerned, a year after the implementation of Brexit most business people and economic experts agree that Catalan business is largely overcoming the obstacles caused by the UK’s departure from the EU. Recent data from the Barcelona Chamber of Commerce, covering January to September last year, show that Catalan exports to the UK stood at 2.87 billion euros, 22% higher than in the same period in 2020, a year in which the pandemic severely affected sales abroad. If we look at the same period before the pandemic, in 2019, the figure is 11% lower. However, it must also be remembered that in 2019, with Brexit imminent, many companies advanced export and import deals, making it an exceptional year in terms of Catalan-UK trade.

Marín Orriols, international director of the Barcelona Chamber of Commerce, says that the UK is Catalonia’s fifth largest trading partner, with sales there equivalent to 5% of Catalan GDP. The sales are mostly in three sectors: automotive (35% of the total), food (15%) and chemical (15%). Despite a difficult process of pre-Brexit negotiation, Orriols is optimistic about the future trading relationship with the UK. “Without Trump’s influence and with things stabilising in Brussels, it raises a scenario in which the UK’s relationship with the EU could resemble that of Switzerland or Norway,” he says.

The chamber analyst recalls that in the first half of 2021 exports to the UK – always with the caveat of Covid and its effect on activity – fell by 60% because “the regulatory framework was not yet clear, customs were not prepared and this influenced the traffic of goods, as there were saturations, delays and breaks in the production chains.”

The Chamber’s expert points out that, although the UK is now non-EU, there are virtually no limits on the exchange of goods under the new import and export regime. “We can import and export without quantity limitations,” he says. But there are other aspects that have meant a greater bureaucratic burden for companies here and over there: customs formalities, with the cost in time and money that they entail. An example would be the obstacles to Just-in-Time, the inventory management method in which goods are received from suppliers only as they are needed, in order to minimise the costs of production and storage. “With Just-in-Time, going through customs, passing inspections, as in the case of medicines or food, increases paperwork, goes against free trade and is less competitive,” says Orriols, who is convinced that “like in any divorce, the beginnings are more difficult and, if there are children in common, we try to reach agreement little by little.” That’s why the analyst believes there will be a tendency towards some deregulation to facilitate trade. “We may lose trade in the short term, but in the medium or long term it will recover and we will move towards greater mutual trust,” he predicts.

Good prospects

Catalonia is exporting more than ever, a fact that has offset the ups and downs in the domestic market. International trade cannot be ignored, and the great advantage, Orriols points out, is the size of Catalan companies, which are mostly “small and medium-sized, agile and flexible”. All in all, Orriols believes that while 2022 “is not the ideal year” everything will continue in that direction.

Xavier Ferrer, chairman of the International Economic and EU Committee of the College of Economists, is not aware of any “serious problems”. In Catalonia there are about 3,000 companies, which account for around 5% of exports, and which trade with the UK on a regular basis. However, despite initial obstacles, which have added to the logistical difficulties arising from the pandemic, “all the previous information provided by administrations such as the Catalan government and other institutions and entities, such as chambers of commerce or employers, have minimised the risks,” he says. The business world is accustomed to adapting to new circumstances: “There are more controls and delays, but the country has not closed and if a product is needed, the circuits work,” says Ferrer.

The expert points out that, like all beginnings, those of Brexit have not been easy, especially as they have been guided by a government headed by Boris Johnson, a leader “convinced that Brexit is the best option, but who perhaps does not have the ideal attitude for dealing with a split of this nature.” The member of the College of Economists emphasises that, although the Brexit law is what it is, “managing it in a spirit of understanding is not the same as doing it purely for one’s own benefit.”